Insurance and your 'life risks' - are you properly covered

With a recession threatening (if you believe the International Monetary Fund) to take hold of the economy, many people are getting worried about how they would pay the mortgage, the credit card and the bills should the job disappear.

Protection cover for you, your mortgage, your family.

You can take out protection insurance against losing your job or being too ill to work. These products would meet the repayment of debts or provide you with an income for a set period or until you get another job. But with so many different types of policy such as critical illness and income protection; stories about insurers not paying out on claims and investigations into some products by the authorities still going on, you might be thinking that it's all is a bit of a racket.

Are you under-insured?

Whether it is the myriad of protection products that is confusing us or the ostrich mentality, according to AXA's International Protection Scope Survey, we are vastly under protected for 'life risks' to the tune of £2.5 trillion or £176,776 for the average family. Life risks include the likes of unemployment, sickness or becoming disabled or death.

Despite being the second most indebted country in the world with 64% of us holding loans - against 70% in the US - only 44% of our loans are protected by insurance that would help us meet the repayments should we become ill or unemployed.

The Axa study also found that some of us have the 'it wont happen to me' attitude. Around 70% of us believe that we won't face unemployment and half think we won't face serious illness. Stuart Lawson, protection and marketing manager of AXA, comments, "Were happy to buy a warranty with a new washing machine yet fail to take out the same kind of cover for things that can go wrong in our lives."

Could you pay your mortgage if you suddenly found yourself without an income through accident, sickness or unemployment? Check out mortgage protection now.

What are your life risks?

To find out if you have gaps in the life risks protection area all you have to do is ask yourself a few questions:

• Do you have loans and do you pay a mortgage or rent?
• Do you have dependents?
• How would the bills be paid if you couldn't work?
• What would happen if you or your partner were to die?
• Do you have any savings for a rainy day?

Fill the insurance gap

Most of us have gaps and protection insurance is designed to plug the cracks. But before you sign on the dotted line, you should take independent financial advice.

You also need to look at what your employer has to offer in the way of protection and how much sick pay you would get and for how long. Many employers also offer life assurance should you die in service. Other protection policies can be dovetailed in to your existing cover to give you full protection in the event of a life disaster.

Do you need unbiased independent financial advice? Why not give us a call?

16 April 2008 © Moneyextra.com

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